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Incubator Or Movie Studio 2.0?

The Silicon Valley incubator is back, a sure sign that the cavalier optimism of the late '90s has returned. But remember how that all ended? So-called "incubators" quickly turned into "incinerators," as more than 80 percent of the startups that built their way toward an exit strategy burst, along with the larger Web ad bubble. But don't tell that to today's startup farmers, who shy away from the word "incubator."

Naval Ravikant, a venture capitalist, funded a series of success stories, including Epinions and Technorati. He says his latest venture, called Hit Forge, represents the next level in startup development: the movie studio model. "The Web is the most hit-driven business the world has ever seen," Ravikant says. "It's about milestone-based development, piloting concepts, access to distribution ... the problem is finding that next hit." Hits keep the other businesses afloat while bringing investment to the next generations.

It's a high-risk potentially high-reward game. Will Incubator 2.0 turn into Incinerator 2.0? Hit Forge is not alone. Blogger founder Evan Williams, who sold his previous venture to Google has a new incubator called Obvious, which uses a similar concept. Since success is hard to gauge, diversifying your incubation business could be the way to go.

Read the whole story at Business 2.0 Magazine »

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